May 29 (Bloomberg) -- Empire State Building Realty Trust
Inc. has received the votes needed from investors in the tower
for an initial public offering, indicating the approval process
is close to an end after dissension from some holders.

As of yesterday, more than the required 80 percent
supermajority of Empire State Building Associates LLC holders
have approved the consolidation of the building and 20 other
properties into a real estate investment trust, Malkin Holdings
LLC, which controls the tower, said in a regulatory filing
today. Voting for the plan remains open, said Hugh Burns, a
spokesman for Malkin Holdings with Sard Verbinnen & Co.

“We are pleased to deliver to our investors a proposal
which has received such support,” Burns said in an e-mailed
statement. “We will terminate the solicitation in due course.
We urge all investors who have not yet voted in favor of the
proposed consolidation and IPO to do so immediately.”

The approval marks a victory for Malkin Holdings Chairman
Peter Malkin, 79, and his son, Malkin Holdings President Anthony
Malkin, 50, who for more than a year have been battling a
minority of investors who argue that the IPO plan sells them
short. Under the agreements that established the Empire State
Building syndication more than 50 years ago, unanimity is
required among the 2,800-plus unitholders before a sale or
refinancing can proceed.

Opposing Views

The dissident holders have said that too much of the Empire
State Building’s estimated $2.5 billion value was assigned to a
sublease holder, which is majority-owned by the estate of Leona
Helmsley, and that the Malkins were taking too large a stake
under rules that treat the REIT conversion as a sale, among
other objections.

Investors favoring the plan said it offered liquidity by
allowing them to sell their shares if needed. The Malkins also
said that the Manhattan tower has been hamstrung by an archaic
governance structure, and that as part of a REIT it would be
able to raise debt and equity to boost growth prospects.

Separate Building

Holders of another office building slated to be part of the
REIT, 60 East 42nd St., formerly known as the Lincoln Building,
have mostly approved the IPO, according to the Malkin filing
today. Six of the seven groups into which that building’s
investors are divided have provided the necessary supermajority,
which is 90 percent. The REIT can proceed without the completion
of that vote, according to the filings.

Once the Malkins declare the voting closed, holdout
investors in the Empire State Building will have 10 days after
receiving official notice to reverse their votes, or else
receive a token $100 for each of their shares, estimated to be
worth more than $300,000 apiece.

The Malkins may be keeping voting open to avoid having to
offer the buyouts to too many investors, said David Kaufman, a
partner at the Chicago law firm Thompson Coburn LLP, who isn’t
involved in the transaction.

Vote `Calculus'

“They could close this thing tomorrow,” said Kaufman, who
has led more than $8 billion of securities offerings, according
to his firm’s website. “The calculus must be that once you got
over that threshold, a bunch of the dissenters will now just
fall in line.”

A group of Empire State Building investors, including Grand
Central Terminal owner Andrew Penson, were rejected last month
in New York State Supreme Court when they sought to have the
$100 provision declared illegal under the state’s limited
liability law. They argued that the provision unfairly coerces
them into voting for the transaction.

The group has appealed the decision, and has filed a motion
for a stay. They were denied interim relief.

“The decision of the appellate court on whether the vote
was conducted illegally under New York state LLC law is what
investors in the Empire State Building are waiting for,”
Richard Edelman, a leader of the dissenting group, said in an e-mailed statement. “Like a presidential election and national
health care, judges in robes are the deciding vote.”